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- Cash for clunkers putting ~500,000 new vehicles on the steet, most equipped with SXM
- Full quarter of royalty fee price increase, i-phone app and another quarter of cost cutting
- roll out the new thingy next week
- the appearance of the end of the recession
All this = great news for SIRI. I hate to hurry the remainder of summer, but I can't wait to listen to November's conference call.
This bad boy is going to take off like a rocket in the next 6 months.
I'm towing the line, as I always have been, BUYING.....BUYING.....BUYING!!!
LONG, LONG, LONG LIVE SIRI!!!!!
Cheers as always,
-Whynot
I have had an onslaught of emails asking me about Q3, and whether Sirius XM will report a profit.
In short, my answer is no, and here is why.
1. Q3 is traditionally the quarter where the company manufactures their hardware in preparation for q4. This causes variuos metrics like SAC to go UP as there are expenses to manufacturing all of these units.
2. The ramp up in OEM production means more costs. This will also impact SAC. The costs associated with manufacturing and oem subsidies will also whack Sirius XM adjusted EBITDA. This number was $108 million in Q1 and $132 million in Q2. It will be substantially less than $132 million in Q3. People should be prepared for this.
3. The company has another round of 1 time chares including refinancing Sirius debt, XM debt, and final satellite payments. These will hit the company and impact earnings.
This is not a bash, it is just the facts. One time charges cost the company $0.03 cents last quarter. It will impact the company aagain this quarter by 2 or 3 cents. Couple this with higher expenses, and it will be quite difficult for Sirius XM to post a positive EPS.
That being said, media companies do not trade on EPS. They trade on cash flow. Much of the refinancing is helpful to cash flow, so that is a good. Expenses for the OEM channel will generate future subscribers, which is also good.
What the company is doing is good for the long term, but thits in the short will take they will take a hit in the short term.
It is better to deal with and understand the facts than to go into these things misinformed and expecting something that wont happen.
__________________
Tyler
Thanks for ruining my evening!hahahaha Actually, was thinking the same thing...Ramp up in OEM will hit balance sheet pretty hard...did not know about the hardware expenses...does make sense though! But, I think the cash for clunkers/increase in OEM production will help to offset EPS loss! Since last 2 qtrs, media focusing on loss of subs! do you forsee subs gained or lost 3rd qtr?